EIA: Dry Gas Production Continues In Doldrums
Monday, June 18, 2012
The Energy Information Administration (EIA) has reported that after five years of steady growth from shale fields, U.S. dry gas production has flattened due to a market oversupply.
EIA said the moderate 2011-2012 winter reduced demand and pushed gas inventories to record highs. That resulted in nearly a 50% drop in gas prices, causing some energy companies to postpone new drilling and cut back on some existing production.
Natural gas was trading last week for $2.10/MMBtu on the New York Mercantile Exchange, less than half the price a year ago.
Another indicator of the ailing gas market is the slump in drilling. In early June, Baker Hughes reported that 565 rigs were working on gas prospects, down from 879 at the same time a year ago. In contrast, 1414 rotaries were drilling for oil, up sharply from 969 a year ago.
For more information: www.eia.gov